A Primer on Esports in India- Analysis of Player Contracts and Intellectual Property Issues

Sports contracts constitute an important part in the life of a traditional athlete. The same holds true for the digital athletes. The standard form of contracts is usually common in sports. They are an embodiment of “Take it or Leave it clauses” and usually representative of unequal bargaining power. Although these contracts do away with the need to negotiate every minor issue, the federation has to ensure that the welfare of both the federation and the players is taken into consideration.

There are certain elements which are an absolute must for negotiating athlete contracts. As India is presently taking baby steps to make a mark in the professionally developed global Esports industry, our digital athletes are our prized possession who need to be protected and prevented from any sort of prevalent contractual exploitation.

The important factors to be looked at while drafting or negotiating an Esports contracts are as follows-

Consideration – This will include the clauses of payment of salary, base salary, performance bases bonuses, tournament purse shares (the earnings increase if they win and the media hype also accelerates the sale and revenue) etc. The specificity of these clauses should be looked into and any case of arbitrary finality reserved with the organizers of the event or the federation over payment should be double-checked.

Digital athletes have their own fan base and popularity. To cash on their public demand, it is common for them to find themselves obligated to go certain events, tweet fixed no. of times over the week, give interviews etc. As players, it is important that the contracts delineates all these responsibilities specifically and there is a provision to inform the players through advance notices. ( The clauses have assumed exceptional importance in the professional athletes where they are as much a player, as they are an idol, a brand endorser and a very important public figure).

Another important element is morality clauses which outline the parameters to be followed at social events or during the progress of the matches. Esports being international in true sense, such clauses also contain a code of conduct to respect the different cultural sensitivities.

Competitive Integrity- This is an area where both traditional sports and Esports dovetail. The issues of match-fixing, doping and gambling might have found novel ways of expression in the virtual world but encapsulate the same concerns. There are a few international agencies such as Esports Integrity Coalition (ESIC) which have formulated regulatory policies. Otherwise athletes have to mandatorily agree to abide by the event specific policies. In countries such as India, which are not a part of the ESIC, with respect to issues such as bribery and gambling which are not specifically addressed by International Esports Federation (IeSF) and Asian Electronic Esports Federation (AESF), local laws are referred in the case of disputes. It is important for the players or agents to be aware of the governing law of the contract.

Image rights/ Personality Rights- These clauses have been the bone of contention for quite some time both in India and other jurisdictions. In the event of signing the contract the athletes should be wary of the duration and the range of things they are assigning control over to the organizers, federations, and the team owners with respect to their name, persona, logo, image or likeness.

Intellectual Property Assignment– Digital athletes have dual consideration pertaining to personality rights. They have an added virtual identity which can be protected under the ambit of intellectual property laws. Thus the athletes should be circumspect while evaluating these clauses to ensure that they have maximum control over their brand which is distinct from team’s brand with which the player is associated for a tournament ( This is important because even India is resorting to the concept of hybrid tournaments) . Thus the players need to ensure their rights over the ownership of

Trademark rights in their gamer tag and phrases or expressions associated with them

Their past content creation pertaining to any game.

Ownership of their gaming e.g., Origin, Xbox Live accounts etc. and social media accounts.

Termination clauses- They play a pivotal role in any sports player contract. The players should be explicitly aware of the grounds for their termination in a tournament. The provision of notice and appeal against termination should be available to the players to protect their rights and prevent exploitation. The contract should also detail the consequences of the breach of disciplinary processes and non-compete clauses. Additionally, the players should have an option to initiate termination as well, such as in the cases of unreasonable terms for benching them or due to injury. This ensures that the contract is not inequitable.

Understanding the Perfect Mismatch- Esports Federation of India’s (ESFI) Player contract for the Asian Games 2018

There are a few things which lawyers and non-lawyers perceive in the same manner. The expression of utter disbelief on seeing the contractual obligations of the players in the Exhibition event of Esports in Asian Games 2018, is certainly one such rare thing. It gives the impression of being a copied document of the worst template of contracts found online. The following section will vindicate the vitriolic narration.

In the imminent Asian Games, Esports is going to be held as a demonstration sport. The National Qualifiers for the event were held on with only a 36 hour window for registration. AESF has opened a deadline of 15 days between May 15 and May 31, 2018, for the conduct of qualifiers to send the national teams. ESFI took a poll on the Facebook page on 26th May 2018 to gauge the possibility of conducting qualifiers and eventually decided to go ahead with participants having less than two days to be ready for the same. Time constraints is something to which the ESFI certainly seemed oblivious. The contractual obligation threw down the gauntlet to all lawyers to look for tiny vestiges of legal protection for players in it.

Clause 7 of the contract titled –Expenses stated that all participation expenses will be borne by the players. ESFI will not be liable for any accommodation or travel expenses. Moreover, they also have to provide for their own travel and medical insurance. (The welfare of the players certainly does not seem to be their prime concern.)

Sub clause vii of General Terms and Conditions (T&C) stated that any non-adherence with the terms and conditions is a ground for disqualification from the tournament. This is overriding over the requirement of providing an opportunity of being heard in the previous clauses. (This contract can be a perfect case study for the principles harmonious interpretation)

Sub-clause viii of the General T&C states that participants have to make themselves available at any time for any photo-shoots, video recordings or promotion. Additionally, they waive their image rights completely in favour of ESFI and ASFI. This grants the federation a royalty free, exclusive and worldwide license to exploit them on any platform

In per Sub-clause xvi of the General T&C, in case of breach of any of the contractual rules and regulations, ESFI is not responsible to compensate the athletes.

Sub-clause xvii is a notch higher as it immunizes ESFI from giving any feedback or answering any queries of the participants. ( Transparency and accountability are no longer the virtues of good governance)

Per Sub-clause xx, participants agree to assign all the IP and their benefits to ESFI without any qualifications. (My Way or Highway!!)

The supremacy of this contract is ensconced by sub-clause xxi of General T&C. It states that regardless of any forseen or unforeseen events, you cannot withdraw from the competition and if you do so, compensation has to be paid to ESFI within 15 days.

As we move further ahead in the contract, responsibility and governance become parallel to each other. Sub-clause xxv states that ESFI will not liable for any “forseen or unforeseen” event, mishap or damage that might be caused to the participants or their legal guardians. But participants have to indemnify the federation for all damage that may be caused due to their actions which may or may not be within their control. (This is seriously the best example of unequal bargaining power). Similar inequitable provisions continue throughout in the contract.

As they say, save the best for the last, this contract did not disappoint in this regard. Sub clause- Xlii states that the T&C of the contract may be changed or modified at any point of time and they may or may not be intimated separately to the participants. Also, ESFI can withdraw anytime from the tournament without any reason and with no responsibility towards the participants. (ESFI- The BOSS!)

The above pointers justify why the standard form of contracts are known as “contract of adhesion”. In India, unlike in England, there is no separate legislation to govern the standard form of contracts. Despite the recommendation of 103 Law Commission, such a method could not come to fruition.

Although the standard form of contracts is not barred in India, in order to protect the weaker party, there are some legal principles which have to be followed to ensure its enforceability. For example, reasonable notice has to be given to the parties so that they have precise knowledge of all the terms they are bound by. In ESFI’s contract, the discretion of the federation to alter the contract at any time with no liability to give individual notices in case of contract alteration defeats this basic requirement.

Another measure is to enable the party in a lower bargaining position to enforce the terms of the contract in case of a fundamental breach. But in the ESFI’s contract, the federation is conveniently free from all liability of performance, damage or compensation in case of non-adherence. Such contracts can also become unenforceable only if they are signed under influence as per section 16 of the Indian Contract Act (ICA) or are opposed to public policy as per section 23 of the ICA. This criterion will have to be assessed on the basis of objective evaluation of the contract. Besides the standard form of contracts also have to uphold the provision of privity of contract. The liability of the players in case of third party claims also raises question over the availability of these contracts.

Although ESFI, later posted on their Facebook page that they are open to suggestions with respect to the demands of the players, to be incorporated in the contract, this is clearly an indication for the sports lawyers in the country to step up and assist the digital athletes of the country

Esports and IP –The inevitable crossroads

Esports have an interlinked association with intellectual property. The best way to understand the legal complexities of IP for esports is by analyzing the legislative framework for video games as they have occupied a prominent space since the beginning of the 20th century.

In India, the video games are not classified under any particular category of IP. Under section 2 of The Copyright Act 1957 (Copyright Act), “cinematograph works” is defined as

“any work of visual recording on any medium produced through a process from which a moving image may be produced by any means and includes a sound recording accompanying such visual recording and ‘cinematograph’ shall be construed as including any work produced by any process analogous to cinematography including video films.”

As per the above definition, the reference to any “process analogous to cinematography” is wide enough to include video games under its ambit. As per the Copyright Act, the computer programmes can be protected as literary work. Thus the source code of the video games can also be protected under the Act.

The derivative protection to video games holds true for the legal protection of the Intellectual property of Esports in the country. For example, trademark law aids in the protection of the name of the game, its logo, its tagline as well the distinct identity of the characters. Copyright law is usually used in the protection of the source code, background music, and other artistic content which is used in the game. Patent law basically helps in the protection of the gaming devices such as joysticks, or any other technical processes which help in enabling games. Trade secrets come into play when the publishers do not want to divulge the source code of their games. (Competition, not common sense is commonplace these days)

The common contractual requirements pertaining to Esports are as follows-

As per Section 2 (d) (vi) of the Copyright Act, the meaning of an “author” in relation to any literary, dramatic, musical or artistic work that is computer-generated, is the person who caused the work to be created. Thus in the case of Esports, the author will be the publisher of the game who would be entitled to all the authorship rights, This should be read in consonance with section 17 of the Copyright Act which details the different scenario of the first owner of the copyright. Thus only in the absence of a contract to the contrary such as contract of employment would the authorship normally vest with the publisher.

2. As per section 18 and section 19 of the Copyright Act, the owner of a work can assign the rights through a contract. Thus the publishers of the game can transfer the limited rights to the organizers of the tournament through an assignment contract. The assignment contract as per section 19(3) also has to specify the amount of compensation/ royalty if any that has to be paid or their legal heirs. The licensing and assignment provisions also come into play, when the game is inspired from any game or a comic strip etc.

3. Recently there has been concern over the protection of the contribution of the players to Esports while playing the game. Recently by the amendment to the Copyright Act in 2012, there has been insertion and protection of performer’s rights. As per section 2 (q) of the Copyright Act, performance means -“in relation to performer’s right, means any visual or acoustic presentation made live by one or more performers”. Section 38 explains about the protection of the performer right which is exclusive to the protection of the rights of the authors. This is a fairly new provision and its application for the protection of Esports players is still terra incognita. Although this provision may provide for a possibility of protection for the rights of the players.

This ensures that although there is no direct provision for the protection of Esports IP, India certainly has a basic legislative framework in place to provide protection for its development. As the governance for Esports becomes sophisticated, there might be a possibility to bring in new legislative mechanism tailored to the specificities of Esports.

Do stay tuned as we will shortly come out with an article explaining the issues of broadcasting, competitive integrity and mental disorder associated with Esports in India.